Critical Compliance Issues

HR leaders need to keep an eye on these six regulatory issues.

By Mike Trabold

With the flip of the calendar to a new year, one thing on the mind of many HR professionals is the ever-changing regulatory landscape. According to the 2019 Paychex Pulse of HR Survey, 35 percent of HR leaders cite keeping up with regulations among their top challenges.

HR leaders planning for 2020 have much to consider as employment laws continue to evolve at the federal, state, and local levels. From healthcare to paid leave to marijuana legalization, here is a selection of the top regulatory issues HR leaders should be tracking closely this year.

  • Healthcare reform. Many healthcare regulations have shifted under the current administration, including association health plans (AHPs), short-term limited duration insurance (STLDI), and individual coverage health reimbursement arrangements (ICHRAs). Additional changes include the removal of the federal penalty under the individual mandate.

In some cases, these changes have prompted states to take legal action to shape the health coverage in their geographies, including instituting their own individual mandate or further limiting the federal rules of AHPs and STLDI in their jurisdiction. As a result, depending on where they are based, employers may have some new alternatives and obligations when it comes to employees’ healthcare options. These choices are often complex, and the current landscape is fluid as both state and federal elections in 2020 have the potential to alter this trajectory in various geographies.

  • Sexual harassment prevention. The #MeToo movement continued to drive attention to the prevention of sexual harassment in the workplace in 2019. In response, state and city legislatures, including California, Connecticut, Illinois, New York state, and New York City, passed legislation and developed regulations that included provisions to implement or expand employer requirements for workplace sexual harassment prevention policies and/or training. HR leaders should consider examining their internal processes for addressing inappropriate behavior in the workplace and creating a safe, respectful environment for all employees and non-employees.
  • Paid family leave and paid sick leave. Many state and local jurisdictions have implemented paid sick leave laws, and eight states and Washington D.C. have passed legislation to implement paid family and medical leave programs, providing eligible employees with partial wages when taking leave to care for themselves or a covered family member. Bipartisan interest in a paid family leave law at the federal level also exists, with several proposals being considered at this time. Also trending in 2019: Maine, Nevada, and Bernalillo County, N.M. passed paid leave laws requiring employers to provide paid time off to eligible employees without requiring a reason for the leave.
  • Marijuana legalization. State and local jurisdictions continue to enact legislation that addresses decriminalization of marijuana, recognition of medical marijuana use, and/or legalization of recreational marijuana. Currently, 11 states and Washington D.C. have passed legislation to legalize marijuana for recreational purposes. HR leaders must stay apprised of these legal developments as well as court decisions, and consider adjusting their risk mitigation strategies, including workplace policies to allow for accommodations for the lawful use of marijuana for medicinal purposes and the parameters of existing drug testing programs.
  • Form W-4 changes. All new employees hired as of January 1, 2020 must complete the new Form W-4 that was released in December 2019. Existing employees are not required to complete a new form but can choose to adjust their withholding based on the new form. Any adjustments made after January 1, 2020 must be made using the new form. HR departments must be prepared to compute employees’ withholdings based on both the old and new versions of the Form W-4.
  • Final Overtime Rule. In September 2019, the U.S. Department of Labor (DOL) announced the Final Overtime Rule to revise the federal regulations governing which employees are entitled to minimum wage and overtime pay under the federal wage and hour law. Among other changes, the Final Overtime Rule raised the “standard salary” for executive, administrative, and professional white-collar exemptions from the currently enforced level of $455 to $684 per week (equivalent to $35,568 per year for a full-year worker), effective January 1, 2020. The new rule also allows employers to use non-discretionary bonuses and certain incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level in a 52-week period.

While keeping up with these changing regulations can be a challenge, maintaining compliance is paramount. HR leaders should communicate regularly with the C-suite to ensure that the proper steps are being taken to comply with current regulations and those to come at the federal, state, and local levels over the coming year.


Mike Trabold is the director of compliance risk at Paychex Inc.

Note: The information contained within is not tax or legal advice. These issues are complex, and applicability depends on individual circumstances. Businesses should consult tax or legal counsel before taking action on any of the items identified above.

Posted February 18, 2020 in Risk and Compliance

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